Real Estate Finance in BD

8/12/2019 Real Estate Finance in BD

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Farzana Lalarukh

ssociate Professor

Department of Finance

University of Dhaka



Name ID

K. M. Najmus Sakib 16-020

Md. Rased Mosarraf 16-62

Tamanna Tavir Haque 16-088

Md. Kamrul Islam 16-090

Rajib Kumar Deb 16-106

Mahmudur Rahman 16-182



Project Development

EASTERN HOUSING LIMITED

of



Eastern Housing Limited was incorporated in 1964 as a Private

Limited Company under the Companies Act, 1913. In 1993 the

company was registered itself with RJSC & F as a Public Limited

Company which is one of the largest Real Estate Company in the

private sector.

The company raised its capital by way of an overwhelmingly

subscribed IPO of shares and debentures through a prospectus

issued in July 1994 and entered in DSE.

It was formed under the leadership of entrepreneur Mr. Jahurul

Islam to reduce the housing problems of Dhaka city. It started its

work by successfully implementing a project of building 700

houses in Pallabi Thana, Dhaka, and acquiring 910 acres (3.68

km2) of land.



To carry on business of Builders,Engineers, Architects andConstructors

To provide lands with buildings,apartments, houses, flats orother accommodation

To sell, mortgage, give on leaseland, house sites, and buildings.



Landacquisition

• 1)Purchase of undeveloped land

• 2)Development and material expense

Land acquisition cost

Registration, legal and stamp

cost,

Mutation, Deed collection and

Brokerage and others expense.

Earth filling and development

work

Social & surrounding

development

Labour expense



Construction

• After improvement of the undeveloped lands the companies startsits construction process for completing its buildings such as

residential and commercial complexes.

• The average construction period of the buildings by the Eastern Housing

limited is 3-4 years.

ompletion &occupancy

• After the completion of the construction process the companystarts transferring of property to the respective parties or

customers.

Management

• From construction to handing over of title to the customers they retainthe management of the land development and project constructionprocess.

• They hold the management of the project up to completion.

Labour expense,

Land rent / khajna,

Material cost, Electrical materials,

Rod and sheets,

cement

sand,

stone and concrete,

Decoration works, Sanitary, pipe and hardware

materials,

Quality testing and other works



Sales

• Eastern Housing limited sells the developed or undeveloped landto the customer. Then the customer is required to make a downpayment of 20%-30% to the company.

• after the down payment is made, the installment payment starts.In this stage the company develops the projects and constructs theimprovements if required by the customers.

• Incase of failure by customer to pay installment he or she is givena short notice to pay the accrued interest with limited period.

• If the customer takes long time to pay interest then he is chargedwith interest generally bank interest rate.



The company finances development activities through these sources of funds:

Company’s internal financing,

Issuing securities,

Loan from different sources such as term loans and overdraft and

Advanced from allotment of Land.

Term loans are secured by equitable mortgage of land and will be due for

payment after one year or more from the reporting date.

Shahjalal Bank Ltd, Prime Bank Ltd. and United Commercial Bank Ltd. aremain loan suppliers

Almost 20% down payments are received from customers.



After partial acquisition of the property from Eastern Housing the customer can assign thetitle of the property to the third party if he or she fails to pay the monthly installment by

notifying to EHL. Transfer fees are charged. Then new owner will be liable to previous owner

to pay the installment.



Notification of Default and the acceleration clause:

In the event of past due installment payment the company notifies the customers that

the accrued installment should be repaid. The customer is provided a certain period to

make the due payments.

If the customer does unnecessary delay, then the company imposes a certain rate of

interest on the due amounts.



Target Market

The company’s target segments are down town which

projects are developed in the low lying areas of Dhaka cityand Savar.

In recent time EHL have developed projects in Gajipur to

provide the people the housing facilities at affordable price.

Marketing and Advertising Strategy

No separate marketing and advertising department in its

business.

Sales department does this strategy through newspaperadvertisement and bill-boards.



Statistics of Eastern Housing limited

v



LAND

DEVELOPMENT



East West Property Development (Pvt.) Ltd. is the

flagship company of Bashundhara Group.

Founded in 1987.

Focused land development.



1. Bashundhara Riverview, Hasnaband, Dhaka

2. Bashundhara Riverview Green Town

3. Bashundhara Green City

4. Bashundhara Baridhara

5. Bashundhara Reverview

6. Bashundhara Riverview Dokhina

7. Bashundhara Uttar Khan8. Bashundhara Lake View

9. Bashundhara City View



Low lying areas of Dhaka city

Bank of Buriganga

Savar

Gazipur

Uttara



Initial Contactby LandBroker

• Site inspection

• Market study

• Cost estimation

Option Period

• Feasibilityappraisal anddesign strategy

• Negotiatingwith contractor

DevelopmentPeriod

•

Purchase Land• Fill up and level

the field bysand.

• Close landdevelopment plan

Sales Period

• Implementmarketing program

• Sales the plot



East West Developer PVT Limited normally purchases vast area from different people. So theyneed a lot of money. They mainly take long termloan from:

Pubali Bank.

Mutual Trust Bank.



Insidecountry

• Dhaka- Cheque, DD, Pay order

• Outside Dhaka- DD

Abroad

• Bank to bank (Pubali and Mutual Trust Bank)

• Money exchange to bank .



Booking Money 25000 - 1,00,000 Taka

Down payment 4,00,000 Taka

Discount Rate Payment 15% For one time payment

12% For 12 months payment

10% For 24 months payment

7% For 36 months payment No discount For 50 months payment



Buyerpays

Registration

fee

Gas

connection

fee

Electricity

connection

fee

Water

supply

connection

fee



Real Estate Sector in Bangladesh

Problems in Real Estate in Bangladesh

Planning Problems

Designing Problems Structural problem

Construction Problems



Real Estate Sector in Bangladesh (Cont’d) Recommendations for Real Estate in Bangladesh

appropriate planning and programming for constructingproject

adoption of new construction technologies

with help of professionals should formulate general guidelinesof building designs

specialized standards and code should be made forconstruction materials

simple and innovative technologies which can reduce cost andincrease quality

research and innovation for development should beencouraged



Real Estate Sector in Bangladesh (Cont’d) Recommendations for Real Estate in Bangladesh

research outputs should be made available to the publicthrough institutions and mass media.

local based building materials as well as cheaperalternative/substitutes should be encouraged.

special financial policies for consultants/contractors financing

should be introduced adequate legislative support is needed to recognize the

construction sector

special attention would be given to protect the physicalenvironment

overall management effectiveness is essential for theconstruction

Real Estate Finance in BD

Documents

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